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China Welcomes Representatives from over 100 Countries to the First Belt and Road Forum

China Welcomes Representatives from over 100 Countries to the First Belt and Road Forum

No. 3, Jan.-Feb. 2017 » Bridging News

Last week in Beijing, leaders and officials from dozens of countries and international organizations participated in the Belt and Road Forum for International Cooperation. Here, Chinese leader Xi Jinping reinforced the need for cooperation in order to achieve mutual benefits and push forward economic development in Eurasia. The Belt and Road Initiative (BRI), the “project of the century”, as Xi Jinping called it, aims to develop infrastructure projects such as railways, ports, roads, linking China to Europe and all the countries along the way. This Initiative carries a great importance not only in terms of economic development, but also in terms of a new alternative economic order. China is also developing a new institutional framework for cooperation, with components such as the Asian Infrastructure Investment Bank (AIIB) and the Silk Road Fund, which enhance the geopolitical role.

The Belt and Road is also an attempt at “rebalancing economic globalization”, President Xi said at the opening of the event, after emphasizing the need to fight against protectionism and “exclusive agreements”, as inclusiveness is one of the main characteristics of the Belt and Road Initiative. Through the BRI's inclusive and open character, China attempts to attract as many participants as possible and bring economic cooperation to a new level which provides a great opportunity for China’s economic expansion. President Xi Jinping stressed that countries “need to seek win-win results through greater openness and cooperation, avoid fragmentation”, which is another reference to China’s objective of promoting a globalized economy open to Chinese economic interests. As opposed to President Trump, China’s current interests compel a different rhetoric, which focuses on the interdependence between countries and the need for cooperation. China is trying to fill a gap and the BRI is President Xi’s bet for making China the new leader of global economic development. China needs the BRI to tackle its own economic problems, to develop its Western provinces and offer Chinese companies and their excess building capacity profitable projects abroad.

President Xi Jinping also talked about the progress of the Belt and Road Initiative in the last four years such as increased trade, infrastructure and financial connectivity, total trade between China and BRI countries exceeding 3 trillion USD and Chinese investment growing to more than 50 billion USD. He emphasized the need for innovation as well, showing that the BRI is “a road of innovation” and countries should pursue innovation-driven development. Innovation is currently one of China’s main goals in reshaping its economy and building more innovative and sustainable industries. Therefore, China will launch a new framework for innovation cooperation called the Belt and Road Science, Technology and Innovation Cooperation Action Plan, which will offer exchanges, training, and joint laboratories for scientists and engineers.

During the Forum, 68 countries and international organizations signed agreements with China, President Xi said. These include a Free Trade Agreement with Georgia, an Initiative on Promoting Unimpeded Trade Cooperation along the Belt and Road signed by 60 countries and international organizations, the joint “IMF-China Capacity Building Center”, and assistance agreements with several United Nations institutions, the WTO etc.

Although little information was provided about loans and the upcoming projects, a major announcement was that China will boost funding for BRI by adding an extra 100 billion RMB to the Silk Road Fund. Also, the Chinese government will increase assistance for countries along BRI (no less than 60 billion RMB) and will provide 2 billion in emergency food aid. Also China Development Bank and the Export-Import Bank of China will set up special lending schemes (RMB 250 billion and RMB 130 billion) to support cooperation projects on infrastructure, industrial capacity and financing.

Despite President’s Xi’s enthusiasm and promises for building an inclusive, open cooperation framework, some Western diplomats are concerned about this initiative being a means of expanding China’s influence at a global level, while keeping the Chinese market relatively closed to foreign companies. Transparency and access is a serious issue for foreign companies trying to invest in China, which contrasts with China’s increasing investments in places such as Europe or Africa. This double standard is leading to reactions, for instance in Germany, according to an ECFR brief.

From the G7 countries, only Italian Prime Minister Paolo Gentiloni attended the Forum, while other Western nations sent top officials. The US also sent a delegation led by Matthew Pottinger, senior director for Asia at the National Security Council. Instead, heads of the World Bank, International Monetary Fund and the United Nations were present at the Forum. Russian President Vladimir Putin attended the Forum and showed great support for the Belt and Road Initiative and its future projects, though, in practice, Russian attitudes have been hesitant towards anything that might upset the balance of perceived power in its presumably equal partnership with China.

On the opposite side, India refused to attend the event in Beijing, showing concern and disagreement with China’s intentions, especially considering the 57 billion USD trade corridor project in Pakistan that crosses Kashmir, a disputed territory between India and Pakistan. The two, however, joined the Shanghai Cooperation Organization, a military organization jointly led by China and Russia, on June 12.

President Xi closed the Forum on a very positive and confident note and announced that the second Belt and Road Forum will take place in 2019.

 
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